The Impact of Microfinance on Entrepreneurship in Kyrgyzstan

Abstract

This paper aims to investigate the impact of microfinance on entrepreneurship in Kyrgyzstan. For estimation the nationally representative "Kyrgyz Integrated Household Survey" for 2013 is used, which covers around 5000 households from all regions in the country. The main variable of interest, the probability of being an entrepreneur of household members depends on individual, household level characteristics and on microfinance loan receiving status. Following the literature, due to the endogeneity issue in using microcredit loan in estimation, this research applies binary response model with instrumental variables. Estimation results show that participation in the micro loan raises the probability of individual to be entrepreneur.